ESTABLISHING A COMPANY IN KURDISTAN DOING BUSINESS IN KURDISTAN SERIES 01

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1 ESTABLISHING A COMPANY IN KURDISTAN DOING BUSINESS IN KURDISTAN SERIES 01 SUMMARY There is no sponsorship system, therefore 100 % foreign ownership is permissible. Most used type is limited liability companies. Minimum capital for a non-construction LLC is around 850 USD. Minimum capital for a construction LLC is around USD. An LLC can be established by at least 1 and up to 25 shareholders. The shareholder(s) has to be present in Kurdistan when the procedure is started. An office space is needed for the company. Each company must have a service contract with a local lawyer and a local accountant under Iraqi law. Registration procedure should not take more than 15 days. Kurdistan region of Iraq is growing. A noticeable change can easily be seen in every step of life. Foreign banks have been following the foreign companies one after another. A highly vivid business life has been changing its shell for more than a decade now by using the modern commercial tools of 21 st century. Furthermore the region is not only the safest place in Iraq but also one of the safest within the whole Middle Eastern geography. Establishing an independent Iraqi law company in Kurdistan region is another option for those intending to do business and have physical presence in Kurdistan. Unlike many Middle Eastern countries, there is no sponsorship system in Iraq. Therefore a foreigner does not need to make a partnership with an Iraqi national in order to establish a company under Iraqi Law which means a 100 % foreign shareholding is permissible. There are different types of companies that are regulated under Iraqi Company Law No.21 of However as it is the case for the rest of the world, the most common form is 1 Modernized by 2004 Amendment. ESTABLISHING A COMPANY IN KURDISTAN/DOING BUSINESS IN KURDISTAN SERIES/01 1

2 limited liability companies (LLC). Furthermore, for instance, establishing a joint stock company in Iraq is a quite complicated matter as the shares of a joint stock company have to be offered to the public for subscription first and then the procedures can be completed. So we will be giving details about establishing an LLC in Kurdistan in this article. (In order to get more information regarding different types of companies, please contact us via info@gurulkan.com) The minimum capital of an LLC is IQD (circa 850 USD as of summer 2011) and this amount must be fully paid at the time of establishing the company. For an LLC which is in construction business, the minimum capital is 200 million IQD (circa 170 thousand USD). The capital of the company has to be deposited in a bank in Kurdistan and may be drawn back once the establishment procedure is completed. The company shall also need an office space to do business in Kurdistan as this is mandatory under Iraqi law. So the manager has to sign a rent contract and photocopy of this contract shall also be put into the company`s file in the company registration office. During the establishment procedure, an officer from the registration office visits the company address in order to check whether the company is really there or not. An LLC may be established by at least 1 shareholder and up to 25 shareholders. The shareholder or shareholders have to be physically present in Kurdistan in order to start the procedure but may leave Kurdistan after staying a couple of days to give a power of attorney and receive a residence permit for 3 months. The residence permit for a shareholder is given by the Kurdistan Aliens Office. There is no work permit system, a residence permit is enough to stay and work in Kurdistan. Under normal conditions, a residence permit for 3 months shall be given to foreigners provided that a local person becomes a guarantor or another company gives a confirmation document for the said person. When the whole procedure is finished and the branch is established, there is no need for a guarantor for the shareholder anymore. Under normal conditions, a residence permit for a period of one year shall be granted following the first residence permit for three months. ESTABLISHING A COMPANY IN KURDISTAN/DOING BUSINESS IN KURDISTAN SERIES/01 2

3 Other than the rent contract, the local lawyer who is to follow the procedures shall need a power of attorney from (each) shareholder and the photocopies of his/her (or their) passport(s) (especially the page where the Kurdistan visa or residence permit is stamped). The local lawyer should also be informed about what the title of the company shall be. It is highly recommended to give a list of names and their meanings to the lawyer as this may be a very complicated matter within the chamber of commerce where the approval for the company name is given. Otherwise a long delay may occur as each check takes a couple of days. Once the approval for the company name is taken, it is only a matter of couple of days` work under normal circumstances. Under Iraqi law, every company has to make a service contract with a local lawyer and a local accountant. For construction companies, a contract with a local engineer is also needed as well as the aforementioned two contracts. These local people do not work for the company (most probably the shareholder(s) or the manager shall not even meet them). However as this is a legal necessity, these contracts must be put into the company s file at the company registration office. One should not be worried about labour law issues; these people shall ask some money to sign these contracts and nothing beyond that. Please also bear in mind that these contracts must be renewed every year and another payment shall be made to these people as well as some fees for the company registration office. The company registration procedure shall not take more than 15 days (Actually it takes around 10 days under normal circumstances but one should always keep in mind that a possible delay may occur because of the company name issue, the relatively slow bureaucracy and numerous administrative holidays). ESTABLISHING A COMPANY IN KURDISTAN/DOING BUSINESS IN KURDISTAN SERIES/01 3

4 Contact If you have questions regarding the information in this article, please contact one of the attorneys listed below. Haluk Gurulkan Erbil Yasin Çakır İstanbul To access more articles, please go to This publication is prepared for the general information of our clients and other interested persons. Materials have been abridged from laws, court decisions, and administrative rulings and should not be considered as legal opinions on specific facts. Information provided herein should not be acted upon in any specific situation without appropriate legal advice. Prior results do not guarantee a similar outcome. All rights reserved. Material appearing herein may be reproduced or translated with appropriate credit Gurulkan Law Firm ESTABLISHING A COMPANY IN KURDISTAN/DOING BUSINESS IN KURDISTAN SERIES/01 4

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